“We got together and made the decision that we really would be well served by creating a strategic plan,” say Buenz, president of Advanced Aromatics. “We involved most of the employees in the company to look at our strengths and weaknesses. From that effort, we developed a strategic plan for the company.”
Advanced Aromatics has grown about 10 percent a year since the strategic plan was conceived in 1995. Revenue in 2005 totaled about $39 million at the naphthalene and naphthalene-derivatives manufacturer. Smart Business spoke with the company’s president about the importance of being a good communicator and enjoying your work.
Q: How do you find the right employees?
We want first to understand internally what we want that person to do. Do a lot of networking and a lot of listening.
It’s important that more than one person on the team is involved in the hiring process or the interview process. If it’s a key position, you’re going to want to have input from the sales and marketing and manufacturing, and as many different viewpoints as you can get or as time allows.
I like to understand a person’s goals and objectives. What have they enjoyed in prior work experiences? What have they considered successes? What are their longer-term goals?
Hopefully you have taken enough time to develop a relationship with this person before you enter into an employment arrangement.
Q: How do you develop a vision?
You can put something down on paper and you can talk about it, but it depends on doing a lot of talking and a lot of listening. We started back in the mid-1990s doing work across the company with all employees, doing a lot of interviewing and discussion, to work through the strengths and weaknesses that we had in the company.
Hopefully, a company is going to be mature enough that they will be able to examine their strengths and weaknesses. Examining what the marketplace is telling them at the time. Understanding your people are your strengths.
Go to your people and get input from them. Move from there to enunciating a strategy. It should take time to mature and develop that strategic statement.
Once you have developed that mission statement, you have to walk the talk and mold your business to fit the vision that you have. It’s not done overnight. You have to keep reinforcing that statement. It’s a continual process, and it has to be measured.
Q: How do you convey the vision to employees?
It’s not a one-time event. You have to do it, I won’t say on a daily basis, but as frequently as possible. Have face-to-face communication with your employees. Put things out in print form for your employees, but face-to-face communication is as important, if not more important.
The managers throughout our company have specific groups that they are responsible for. It might be R&D, it might be operations or it might be maintenance. Use the organizational structure to communicate downwards. It’s my personal style that I like to know all the employees in the company and use that opportunity to gauge whether the word is getting out.
Q: What are some keys to being a strong leader?
Try to enjoy something out of every day. Be able to make good, timely decisions. Be pretty comfortable with risk.
Any decision that you make has risks associated with it. The key is to have an innate sense of what risks are acceptable. What are the boundaries, both positive and negative? Be able to make a decision based on the information that is presented to you.
Give good, constructive feedback to employees. Give assignments, lay out plans and then give feedback to the individuals concerned as to how they have performed. If something is not working, it needs to be communicated as quickly as possible so they can make a correction. I want them at the end of their career to feel like they have accomplished most of the goals that they have set for themselves. Stay in touch with your customers. Even though I’m not the person that is taking the order or setting the price, I want to know how he or she feels about our company.
I want to meet and know as many of our customer contacts as is possible so that we do not simply have a paper relationship but a personal relationship. I want people to feel good about the endeavor that they are involved in with my company.
HOW TO REACH: Advanced Aromatics L.P., (713) 296-7505 or www.advancedaromatics.com
Walters says he learned this valuable lesson more than 20 years ago when he landed two major customers and began to wonder how he was going to handle the extra workload.
“I quickly realized I needed good managers to watch this or I could never leave the office,” Walters says. “I could never go sell another client because I had to sit here and keep running these clients and managing the staff.”
So Walters brought in new managers and increased his staff from 12 in the early days to 68 employees in his Anaheim office today, with 110 employees across the nation. Revenue rose from $22.6 million in 2005 to $25.1 million in 2006.
Smart Business spoke with Walters about the importance of delegating responsibility to allow for continuing growth.
Q: How do you identify leaders in your company?
Leadership entails having em-pathy for others and to not be fearful of making decisions. If I or the managers of a department are gone and a decision has to be made, we encourage the people, even at the low level, to make a decision.
They don’t always have to be right, but those who are willing to do that and take that risk are generally the right kind of people for leadership roles. If they are not a risk-taker and they are not a decision-maker for even minor things, then there’s no way they can manage other people.
You can refine it and groom it, but they either have the spark of leadership or they don’t. As a leader, you’ve got to be able to motivate people and have the fire in your belly to succeed.
Q: What is an important skill all CEOs must learn?
You have to delegate to your managers under you. If I tried to manage all 68 people, I would fail. I deal with six managers. It’s nice to meet and get to see the staff down below but day to day, I work with the six managers that I supervise.
If you are a strong, aggressive person, you tend not to want to trust anybody around you. I still suffer from that but I delegate, and then find if I have good follow-up or reporting, I can tell very quickly if what I delegated is getting done without having to go out and do it.
It was a little hard at first, and even today, I still check in two or three times a day to see how everything is going. But I don’t worry beyond that, that things are not functioning and operating. I do read my e-mails once a day, which allows me to see if any customer is announcing a serious problem that is getting out of control.
Q: How does a CEO get a read on his employees?
I still walk throughout the building every day and visit periodically with every employee in the building at least once a month and inquire how they are doing. Sometimes you can learn a lot about the health of your business by talking to the troops rather than the managers.
Sometimes, if there is something not quite operating the right way, employees are reluctant to tell their immediate supervisor. Or the immediate supervisor is reluctant to tell me. It’s the same style we use in working with our clients. We can’t tell them what to do, but we do work as a team to help them see the right vision and have the tools to make the right decisions, and then we implement those decisions.
Q: How do you deal with stress?
Anybody who runs a business, we all tend to be a little intense and very focused on what we do. So it’s easy for us to get running down the street too fast and be too focused on one approach, when, in fact, there could be a fatal flaw in that approach.
Some managers and presidents get so demoralized when something fails, they begin to lose their way. They lose their faith in themselves and their trust in their judgment. That’s dangerous. That is the beginning of the end for running a business.
Talk it out with your few trusted souls that might be with you in the business or your wife or somebody you can talk to. Keep links open. Talk privately and intimately with others to bounce off your thoughts and your ideas.
You need to talk things out with other people and get yourself back off the ropes and your spirits back up.
HOW TO REACH: Freight Management Inc., (714) 632-1440 or www.freightmgmtinc.com
Stay out of the way. I articulate the objectives that I have, and then I assign the tasks and responsibilities to the appropriate manager or person in the company. I really trust them to take an assignment and run with it.
As a president, I don’t want to have to oversee every little detail. I want to rely on my key staff to handle things so I can have more time to look at the big picture.
I hear of people who are micromanagers or who have to oversee everything. We try to reach consensus on things and assign the right jobs to the right people.
Consensus isn’t really hard to come to. People may have other opinions. They may not agree with something 100 percent, or they might like to see it done a different way. But when we reach the decision, we kind of agree that this is what we’ve agreed to.
The message we’re going to deliver is not going to stray from that. If an individual does not agree with it 100 percent, they have to be able to live with it.
Do a reality check. It’s important to strive to do better. But you have to decide at what cost. When you’re setting goals and when you’re trying to be successful in a company, reality has to be there on many levels.
You want your employees to be able to succeed. You can’t be overzealous. Use your patience. There’s a lot to growing a business, and there is a lot to developing a successful company. It takes people working together.
It’s not hard to be patient, as long as you are making headway and your people are growing and your company is growing and your employees are confident and happy in their work.
Do the right thing. If you start a company or you’re running a company and you don’t believe that you can succeed and don’t believe that you have the right people in your company to do the job, it’s almost like a self-fulfilling prophecy. You’re doomed if you don’t believe you can do it.
Do the right thing and approach things with honesty and integrity and [do] not try to ever fool anybody in the things that you’re doing, whether it be a service that you deliver or a product that you make, because it will always catch up with you. Having integrity and being direct and honest, in any life, whether you’re the president, the CEO or anybody, that’s part of being successful, as well as to be able to do those things and articulate clearly.
Let employees know you value them. Every single person here is important, and they have to know that they are viewed that way.
I want people to know how what they do fits in to the big picture and why it’s important. We really try to communicate that.
I want people to want to like to come to work, know what their responsibilities are and do the job and do it to the best of their ability and then benefit from the results.
It’s wanting people to grow and get more opportunities. Everyone has to understand that what they do impacts the next person. I think that really helps build a good team relationship.
If you don’t understand why you’re doing something or why somebody is asking you for something, you may not have the desire. If you don’t understand it, what’s going to motivate you to do a good job?
My expectation is that you’re going to get the job done. We’ll give you the tools to do it. It’s important that you understand that and that you make a difference in the company.
Let it go. It’s hard for leaders to admit that, ‘I’ve got to let it go, I made a mistake, and it’s time to move on.’ Sometimes, there are things that we’ve started or that I’ve initiated where I have to learn it’s time to let go.
You feel like you’re supposed to have the answers and be strong. You are trained that you are supposed to have it right and you’re an example for others.
If it’s a performance issue, I always give myself and others a second chance. If it’s my failure, if I had a critical idea and it’s not going as expected, I have to know when it’s time to let go.
I take responsibility for the mistake and move on. Little mistakes happen. A system that we were having designed for us, there was a lot of programming involved in it. It was just going on and on and the money was piling up.
Even though that investment was made, because of that investment, you sometimes say, ‘OK, let’s just keep going.’ But you have to know, ‘OK, I’m not going to do it anymore. I invested the money, but we’re going to stop here and we’re going to try a different avenue that is going to make it more successful.’
I know when to let go and move on and accept that it was a mistake.
Put your experience to use. I don’t think too many executives come from the HR department. I was a vice president of human resources. My background, education and experience have helped me.
Those skills or those things that I knew or had to deal with in that position have helped me very much in my present job. They’ve helped me have a sense of empathy and just understanding of human nature and trying to have a good balance of work life and personal life for the employees.
It just has helped me build an environment where everyone is important. It’s not a big hierarchy. It’s helped me understand and work with people better.
HOW TO REACH: Innovative Employee Solutions, (858) 715-5100 or www.innovativeemployeesolutions.com
In the months after the Sept. 11 terrorist attacks, the company now known as Marketing Informatics was taking in less than $15,000 a month in revenue. But when Bob Massie closes the book on 2006, the company’s founder and CEO expects revenue to top out at more than $30 million with 100 employees. Massie credits a culture of teamwork and camaraderie for the direct marketing company’s turnaround the 10 employees Massie had at the time of the crisis were willing to miss paychecks and do whatever they could to turn the company around. Smart Business spoke with Massie about how finding the right employees to create a seasoned people stew can help you conquer any challenge.
Find your way as a leader. I like thinking of myself as the head of the family more than an autocrat. It’s not self-conscious. It’s who I am as a person and how I have had to learn to function in this job given my personality. (But) to say I use that style would intimate that I have some self-conscious choice in that effort.
When you grow at the rate that we’ve been growing, it’s almost like there is something new every week that I’ve got to learn, or some new hat that I’ve got to find and make fit my head.
I certainly understand what drives people to be looking at manuals on leadership and different theories about it all. But if you put somebody else’s clothes on, you’re always going to feel like a pretender. Everybody that’s conscientious wants to grow into a capable and respected leader. Sometimes, you’ve got to try those different outfits on and take a piece of it here and a piece of another one there until you finally come to grips with who you are.
If you use those things to avoid coming to grips with who you are, it probably delays you becoming the leader you want to be.
Be consistent. The role of the CEO is utterly critical, but I don’t think the CEO can take him or herself that seriously. If there isn’t an entity, in this case the CEO, defining the objective and rallying the troops with the resources that they need, you can’t win the battle.
It is defining the objective, giving the resources, rallying the troops, making the decisions that need to be made on any kind of an enterprise and essentially facilitating the process so the troops can be successful at what they are doing.
I have to know where we’re going. I can’t decide today that we have one objective and tomorrow that we have got another one just because we had some opportunity come along that might essentially double our growth or give us a 50 percent hit.
Be adaptable. There has to be a consistent objective for the organization and a consistent rallying of the troops and provision of everything that needs to be done.
In a growth company, one of the big challenges is making sure the financial resources are available, making sure that the kind of new people being injected into the organization are right for the people stew that you have brewing.
One CEO could succeed in one setting and fail in another. In a very rapidly growing company, every six months, you have got a different people stew. Make sure the resources and the people coming in to that stew are as appropriate as possible to the mix and that they are the most capable, bright, competent people that we can possibly afford to put in the mix.
Don’t try to do it all. I have delegated all internal authority to the president of the company. I remind myself every day that we have one CEO and we have one president, and the two of them don’t need to be doing each other’s jobs.
If I was a CEO and I was reporting to an owner, it would be a whole different environment. I can accept the investment of resources that won’t pay off for three years, where a CEO that reported to an owner or board may need to have a resource paying off in three months.
I have the unique opportunity of being both owner and CEO rather than being CEO and president. I can inject my own values, my own personal long-term vision and have it coincide identically with the vision for the company.
If you’re anything above 10 or 15 people, and you’re both president and CEO, you have a fool for an owner.
I don’t think one person can do both jobs in an organization that is anything other than stagnant. You cannot be a visionary ambassador to the banking industry, to your main customers and to your professional industry and effectively administrate all of the dynamics and responsibilities of a growing organization internally.
We could not, in any stretch of the imagination, have grown 100 percent a year for four years if I was president and CEO. One of those two roles is going to fall on its face.
Big companies divide these responsibilities out of the sheer practicality that if they don’t do it, they will not be able to report shareholder value back to Wall Street. What makes somebody think that at a small level, they can be what Wall Street demands?
Don’t believe the hype. If you have the right mix of folks together that are better than you and that complement you and that both offset your weaknesses and enhance your strengths, then you end up looking pretty good. Just be careful not to drink the Kool-Aid about how good you really are.
A leader is not a leader in a vacuum. One person in one group of people will have a completely different level of success as that same person in another group of people because there are entirely different social and political dynamics that go on.
Have a culture of collaboration that is held together with a chain of command and accountability structure. People know what’s expected of them, have the resources that they need, have the respect they deserve and thoroughly enjoy this journey we’re on together. That’s the goal.
We don’t always make it that way. But if you aim at nothing, you hit it every time.
HOW TO REACH: Marketing Informatics, (877) 788-4440 or www.marketinginformatics.com
When Trevor Turbidy was named president and CEO of Trico Marine Services Inc. in August 2005, it had been less than six months since the company had emerged from bankruptcy. Today, those problems seem a distant memory as the company whose 830 employees provide marine support to the oil and gas industries expected to post 2006 revenue of more than $230 million, well ahead of its 2005 revenue of $182 million. Turbidy says the key to the quick turnaround was the company’s ability to identify employees who wanted to be part of the solution and fix the problems to get the company back on its feet. Smart Business spoke with Turbidy about how to empower employees in challenging situations.
Find employees with the right attitude. Building the right team was critical to our success. We relied heavily on those people who wanted to increase their responsibility and brought in new people to replace those that weren’t up to the challenge.
The world is full of what I call idea assassins, dream killers or naysayers. Having employees who have a can-do attitude made the difference between success and failure.
I’ve seen numerous examples of people who thought because they were smart, they didn’t need to work as hard as their peers. They would glide by on intelligence.
What separates the good from the great sometimes appears like a small difference. What it means to us is you may stay a few extra hours to give the book one last read or look at the numbers one more time. People didn’t settle for mediocrity. They didn’t settle for good. They wanted to be perfect.
No matter how bright you are, everybody needs to have a strong work ethic and a positive attitude to drive change.
Push people to achieve. There’s frequently people who literally just didn’t have anything positive to say or would never have ideas on how to improve things. They could tell you how things were wrong, but they never came with a solution.
They didn’t want to take ownership of the problem. They didn’t want to help fix the company. There were a number of cases where people had the opportunity to increase their responsibility and chose to stay in their current job as long as the company would let them.
People who took on increasing responsibility got increasing reward. Give people increased responsibility. Push people to achieve more. You’re sometimes amazed by how much people can actually do. We amazed ourselves with how much we could accomplish in a short period of time.
If you let people do what they have been doing forever and people get in their comfort zone, change is tough. People don’t like change. The status quo is easy because it’s what you know.
Take advantage of the market. We’d be fooling ourselves to think that if we had restructured the company and the business environment for our services had continued to turn down, that we’d be successful. We wouldn’t be.
You need to have financial results. You need to have the ability to empower your team to take advantage of what’s going on in an improving market. We corrected the balance sheet and gave ourselves the ability to take advantage of an up market.
Keep it fresh. Empower your team to look at other opportunities. We want people to question each other, and we want people to challenge each other. It’s got to be based on forming a strong team, actively communicating with that team and delegating responsibility and holding people accountable.
What makes people excited about our organization is the ability to impact change. We look for people who embrace positive change. We allow them the running room to shape the company.
Typically, it means either changing someone’s title, area of responsibility or role. If people are in the same spot, doing the same thing, interacting with the same people, they tend to think the same. You’ve got to give people a new challenge, whether it’s a different geographic area to focus on, a different role or more responsibilities. That shakes them up, that gets them out of their comfort zone, and they’ve got to re-energize for a new challenge.
Be straight as an arrow. Put integrity and ethics first. We’ve seen the rollout of Sarbanes-Oxley. We’ve seen what that occurred from.
You’ve got to be ethical, honest and trustworthy ... with everyone in all your constituencies you interact with. We’ve seen numerous examples of people who bent the rules or ignored the rules and were able to convince others to do the same.
You have to lead by example. You have to be straight as an arrow. The world doesn’t expect anything less from people who are filling management at companies, and they don’t tolerate it.
If you’re a positive influence and you echo that through the organization, you find that people embrace that. People respect that. People want to be at a company that is doing the right thing and competing well.
We tell our employees every time we have group meetings , ‘If we can’t win doing it the right way, let’s not win.’ We don’t want to be on the front page of The Wall Street Journal for something that is inappropriate. We’ll win the right way, or we won’t win.
Admit mistakes. People like to think that people in senior positions don’t make mistakes. That’s just not true. The key is you’ve got to admit your mistakes and move on, whether it’s a business mistake for an acquisition or whether it’s a mistake going in a different direction for your business or whether it’s a hiring mistake. Admit you were going in the wrong direction, salvage what you can, and move on and fix it.
We’ve hired people that we thought had the right skill set, excellent industry experience, but they didn’t mesh in our organization. They weren’t going to be successful, and we weren’t going to be successful with them.
You need to move on. Waiting generally doesn’t help. There never appears to be a good time. You always worry about it being disruptive to the organization or about the fallout from doing something quickly.
If there is any fallout, it’s generally positive. What you saw was the exact same thing the organization saw, and the people they worked under saw. Make those changes, move on and then regroup.
HOW TO REACH: Trico Marine Services Inc., (713) 780-9926 or www.tricomarine.com
SearchPath International’s Tom Johnston leads a program that encourages franchisees to be recruiters.
A company in the business of franchising need not look any further than its own franchisees for a great way to expand, says Tom Johnston, president and CEO of SearchPath International.
“The best salesperson you can have for a company is somebody who has already come in, looked at what you’re doing, decided to move forward and purchased a franchise,” Johnston says. “That’s helped us grow the company quickly, hit the market with a lot of credibility, and it’s helped us keep our corporate overhead down because our franchisees are also our sales force.”
The key to making a franchise referral program work is ensuring that the existing franchisees have the right tools to identify and recruit new franchisees who will help the company continue to grow.
“The right way to do this is not to go out and say, ‘Hey, do you want to buy a franchise?’” Johnston says. “We follow a very traditional recruitment process.”
Johnston says that as a talent acquisition professional services firm, SearchPath is very familiar with recruiting. But the steps to acquiring talent apply to any type of franchising organization.
“The first thing you normally do is you talk to them and find out where they are in their life,” Johnston says. “What are the things that are important to them? What, ultimately, are they trying to get to? The proverbial question I always ask is, ‘Where do you want to be three to five years from now?’”
Johnston says it comes down to “being able to truly identify the needs, both emotionally and financially, from a career point of view.”
Recruiting is obviously a vital part of a franchise referral program, Johnston says. But one mistake companies often make in developing a program is building it around a territorial concept.
“The reason why many of the franchises were built on territory when they first started doing business had nothing to do with anything other than long-distance [phone] rates,” Johnston says. With “the cost of doing business back in 1975, when you were doing recruiting, you wouldn’t allow anybody to make long-distance phone calls because they were two or three dollars a minute. You did all your business locally.”
With advances in technology and with the world becoming smaller every day, territorial boundaries should no longer be an obstacle to growth, Johnston says.
“Unless you are fortunate enough to get a very large territory in a desirable area, I think you run into a problem,” Johnston says. “It’s creating restrictions that make it almost a nonincentive.”
One enticement that encourages franchisees to be recruiters is to make them master franchisees, meaning that they get a percentage of the franchise fees and royalties for bringing in new people rather than paying that to someone else.
“They get short-term and long-term revenue,” Johnston says. “We look at the opportunity to create these master franchisees, where they have a vested interest in helping the people that they bring in to be successful. We build that in as part of our support network.”
Franchise referral programs can be “very, very aggressive,” Johnston says, but they can also be very simple.
“Even if it’s just, ‘Hey, if you run across someone who you think would be a good referral, send them on in and we’ll send you a gift certificate, or we’ll give you a couple thousand bucks,’ it can’t hurt,” he says. “The people that have bought in to your organization that are happy and doing well, they are your best salespeople.”
HOW TO REACH: SearchPath International, (216) 589-0431 or www.searchpath.com
A high degree of desire and dedication to one’s personal interests can translate very well in the workplace, says Alex Lukianov, chairman and CEO of NuVasive Inc. And that commitment is critical in the fast-paced world of developing and marketing products for spinal surgeons. NuVasive’s ability to bring in employees who can move fast and get things done quickly was a key factor in achieving $62 million in revenue for 2005 with about 400 employees. Smart Business spoke with Lukianov about the relationship between speed and success.
Set a clear standard. A lot of people talk about culture, but I think it’s something we really try to deliver on here. That has to do with establishing an environment for ‘A’ players to succeed.
You have to have a very clearly understood message and a very clearly understood corporate mission of where the company is going. You have to explain what the values are, and everybody has to be clear on what those look like.
What we are most clear about at our company has to do with absolute responsiveness at cheetah speed. Everybody in this company is completely clear on what that means.
One of the most important values that we have as a company is serving our customers as quickly as we possibly can. We sell to hospitals, but we market to spine surgeons. Surgeons want things done very quickly. It’s immediate just because of the nature of their business.
We have a customized cheetah that we’ve put together with the NuVasive symbol on it. Everybody is very clear about what absolute responsiveness means. We rally around that particular emblem and visual. There isn’t anybody who is not clear about that.
Clearly communicate the company’s vision. Focus the team on execution and on not getting pulled off the ball. I think that’s the biggest challenge for any CEO, to make sure the team is always spending most of their time on the key objectives.
You do it by having frequent meetings with the team. Reinforce that and make people very aware of where they are and where the company is at. You do that through dashboard mechanisms to provide people with feedback, as well as having more casual conversation about it in group settings.
Burn speed into the culture. Everybody in the company has individual performance measurements that tie in to a balanced scorecard that we use. ... What are the company’s goals, what are the key measurements of those goals, and how do they individually contribute and how will they be measured by those goals?
The underlying theme is speed. Everything is speed. How fast can you get it done, how fast can you get a new product to the market, and how quickly can you get back to the customer?
The whole culture and company is geared for that. But it’s not enough to just have symbols. It has to be substantive. What makes it substantive are the very real measures that are implemented by everyone.
Be selective in who you hire. I don’t think that this is a place that works well for a lot of people unless they have the exact same ideas about performance. If they don’t have the same standards, they are not going to do well here, and they are not going to enjoy it.
What I’ve seen is we have a low turnover rate. We try to hire like-minded people that are really into having an environment that allows them to flourish and to achieve to maximum results.
You’ve got people that naturally, not only professionally but personally, stretch themselves. We’ve got people here that do triathlons and people that do marathons. These people are used to stretching themselves in everything that they do.
Those are the kind of people I want to see at the company. I don’t want to see people that don’t fit that mold of top performance. That’s what it will take for us long-term to continue to deliver on the top line and the bottom line.
Make work fun and rewarding. We certainly work hard, but we also take time to celebrate. At the end of the day, people want an environment that is very rich when it comes to their abilities to grow... That’s what nourishes people.
Everybody needs to understand and be a part of the vision and the purpose of the company. If they understand that and if they buy in, they are going to perform.
If they don’t understand those things, or they don’t buy in, it’s not going to make sense. You can implement any management program you want.
You can jump up and down all you want. But if, at the end of the day, people don’t understand the mission and where you’re going and why you are doing those things, it doesn’t come together.
Keep your ear to the ground. If need be, we can turn on a dime. Concurrently, we have a lot of experience in this marketplace, so we have a lot of ears to the ground. We’ve also attracted other executives and other managers to the company that also have experience in the spine arena.
We have about 500 surgeons a year coming to San Diego for training in our operating rooms. Apart from training the surgeons on our very unique techniques, it gives us an opportunity to speak with customers on an ongoing basis and have our finger on the pulse. It comes down to sound strategy and execution, and if you have to make an adjustment, you do.
Watch for changes. The key to recognizing changes is that you are constantly looking for them. You have to have a very active process of business development and looking at deals. I have our chief operating officer and our VP of research and development constantly looking at deals, constantly looking at companies and trying to understand potential trends and new opportunities.
HOW TO REACH: NuVasive Inc, (800) 455-1476 or www.nuvasive.com
Even the most altruistic employees want to be a part of their employers’ success when the profits begin to roll in, says Mingo Lee.
“It’s easier said than done when you’re the owner to say, ‘Don’t worry, we’re debt-free. We’re putting everything back into the company so we can keep growing healthy,’” says Lee, co-founder and CEO of Wahoo’s Fish Taco. “You need to realize the difference between your sweat equity and the things you are gaining from this as an owner, and the guy who doesn’t have any shares in the company. You’ve got to gain an appreciation for where they are.”
So Lee began to look at debt financing as another option for expansion. At the same time, he enhanced compensation packages, offered more health insurance and began to offer profit-sharing plans.
Now, with more than 600 employees at more than 40 locations, the chain of restaurants which offers a mix of Mexican/Brazilian/Asian cuisine has grown from $34.6 million in 2004 to more than $40 million in 2006.
Smart Business spoke with Lee about the importance of relying on instinct in successfully growing a business.
Q: What skills must a good CEO have?
Be compassionate and an understanding leader, somebody who has grown up in the business who has touched every part of the business and really understands and values each one of the employees.
Be decisive. Once you start waffling at the top, I think that really confuses not only your management team, but it just trickles down.
From week to week or month to month, if the direction of the company is changing or even simple operational things are changing, I think that sends a gray message to your crew. All that our good employees want to do is to know what the expectations are and then execute. If you can’t set those expectations and you’re always changing them, it leaves everybody in a state of confusion.
Our management style is very hands-on. It’s to show, demonstrate, teach and re-teach. From top to bottom, there is no wearing a suit and tie at Wahoo’s. You’re getting in the fire right alongside your teammates and employees.
Q: How can a lack of direction hinder growth?
It is the quickest way to have everybody wandering about aimlessly. If you’re not able to follow up on the projects that you delegate, you might as well not even delegate them to begin with. Nobody will have a measuring stick to see that they have arrived and achieved what the expectations were.
Ultimately, they will get to the end of the project and move on to the next, and conceivably, they’ve not even done that right. But they’ve kept on going because nobody has done the follow-up.
We’re always here and we do care about our company and we want to be available to everyone. It’s probably not the most crucial aspect of our management style, but I do believe that keeps our staff engaged.
Q: How do you deal with mistakes?
It’s like seeing your child gain greater and greater independence and feeling that yes, you’ve given them all the tools to succeed, and now you’ve got to step back and let them make some mistakes.
You can’t be there for every decision, nor do you want to be there for every decision. I try to communicate that to my staff.
Before, you might have asked me for the answer; now, I want you to come to me with a couple of different solutions in mind and let’s work through how you came up with those. If you make a mistake and it’s serious enough, we’ll figure a way out of it.
Ultimately, if we make a couple of mistakes along the way, we’re going to learn from them, and next time, you’ll be making decisions. I’m not saying I always make the right decisions, but you’ll be making decisions in the future in the same style or direction that I would have made them, and we’ll all feel better.
Q: How do you earn loyalty from your employees?
You can create an equity program, but shy of creating some type of ownership program for your people, you need to appreciate that they need to take care of their families and their needs.
There is a cap that you will be able to pay everybody. But you should realize that some of the things you feel good about in being debt-free and plowing everything into the company are not necessarily satisfying the emotional needs of your management team in making them feel that they’ve got some future security here.
You can sit and go for a longer-term view and build equity, hoping maybe for some sort of exit strategy somewhere down the road. That same situation does not exist for your management team unless you go the way of creating some type of ownership.
HOW TO REACH: Wahoo’s Fish Taco, (949) 222-0670 or www.wahoos.com
Dennis Casey knew that his company was at a crossroads. It was May 2005, and Casey had just been named president of Anthem Blue Cross and Blue Shield of Indiana. The company, with 700 employees and annual revenue of more than $1 billion, was six months away from embarking on a complete change of its core operating system.
This wasn’t the kind of change that could be conveyed in an e-mail, a note tacked to the bulletin board next to the water cooler or at a morning staff meeting in the conference room.
This change was too big for that.
Once implemented, it would put the company in a better position to handle the increased workload in the midst of the mergers and acquisitions that have made it part of WellPoint Inc., the largest health insurer in the country. “If we don’t make this change now, we are not going to be positioned competitively in the marketplace,” Casey says.
The challenge Casey faced was figuring out how to convey that message to his employees.
“It takes time to change the direction of an organization, and it takes time to create your vision within your organization,” Casey says. “You have to be able to work through people to achieve success.”
Using a comprehensive plan of open dialogue, inclusion and collaboration, Anthem was able to overhaul its core operating system while continuing its pace of rapid growth. Since 2000, it has grown from 450,000 group members to 800,000. “If we were not delivering on our promises to our customers and to our providers and to our brokers, we would not have seen the growth,” Casey says.
Opening a dialogue
After holding a variety of senior management positions over the years with Anthem Blue Cross and Blue Shield of Indiana, Casey knew how important the system conversion was to the company’s future.
Making it work rested with his ability to develop a strategy that would convince employees of its importance and get them enthused about the benefits of the new system.
“The real challenge is, how do you drive that home with people who, day-to-day, are accustomed to working on one system?” Casey says. “They are very good at it and they were providing a good level of service to our client. You go to them and say, ‘Guess what? We’re going to change everything you look at every day.’
“It was really challenging the folks to say [to them], ‘Hey, this is really important to our company long term and to our customers. Therefore, it should be important to you. We need your help to get this done.’”
One advantage Casey has in implementing new strategies is the familiarity his tenured employees have with change through the numerous mergers and acquisitions that eventually led to the formation in 2004 of WellPoint Inc., of which Anthem Blue Cross and Blue Shield of Indiana is a subsidiary. “Our folks are sitting here today and understand where the organization is going,” Casey says. “The next thing you know, we have another merger acquisition on the table. So immediately, the question comes up, ‘What does this mean to me?’ “There is less panic and fear and concern now around our growth because people are more accustomed to change. They accept change, see it as a challenge and they look for new opportunities. It’s more of a positive challenge than a threat.”
But this particular plan was about a lot more than just asking his employees to take one for the team.
He wanted them to know that once they got past their initial uneasiness about the system conversion, it would also make it easier for them to do their jobs.
“It was kind of like if you are a right-handed hitter and I’m going to teach you how to switch-hit,” Casey says. “You know how to hit, but you’ve just never seen the ball coming from the other side of the plate. It’s that kind of environment, and there is a natural hesitancy to learn the new ways.
“The key was communication and involvement. We had a lot of our staff folks that do the work day in and day out in terms of answering our phones and communicating with our customers involved in the design phase of our new system. We basically brought a core system to them and said, ‘This is how this works. What changes do you need to make it even better for what you do?’” Casey says once that was done, training began in earnest for virtually every one of the 700 employees. The message was also conveyed through simple correspondence from one employee to another, where it became clear that the effort had paid off.
“They say, ‘Hey, it’s a change, but you’re really going to like it when you get used to it.’ If they have that level of confidence and respect for the leadership of the company, they are going to step up and want to be part of that,” he says.
“In order to do that, they’ve got to believe that the management of this organization understands their needs as well as our customer needs, cares about both, balances the needs of both and responds to that. The core element is two-way trust.”
With the new system now in place, Casey says efficiency, speed and accuracy have all increased, along with growth in Anthem’s customer base.
“I bill and credit our success to our people,” Casey says. “The real differentiator becomes your ability to harness the energy and brilliance of other people and do that better than your competitors do.”
Inclusion and collaboration
Casey’s success in changing over the company’s core operating system illustrates that developing a strategy is never as easy as just sitting in a room one day and drawing up a plan. It must include contingency plans that address changes that may occur as the strategy is put into place.
“There really aren’t a lot of people that are just smart enough to absolutely predict the future every time,” Casey says. “So you better be ready to change, and you need to be flexible.”
And before trust can be developed between employees and management, there must be trust among members of the management team.
Casey says a good CEO recognizes the importance of gathering input from other senior leaders in the company, even if that input does not exactly match the view of the CEO.
“I’m a very aggressive, very competitive person,” he says. “And I really enjoy having people around me that will challenge me. Our unspoken rules around the planning table are very simple. First of all, we’re a team. I believe, and I know that my people know that I believe, that our best solutions will come from the collective minds of the people in that room.
“Often, I will shape a discussion and throw something out on the table and say, ‘Hey, I think we might want to consider this or that.’ But the end result is always better than what I put on the table or what any member of the team puts on the table.”
The key is to have leaders in your company with whom you are willing to place your trust and confidence.
“You have to have strong people around, and you can’t be threatened by that,” Casey says. “If somebody comes back at me and says, ‘Dennis, I think you’re all wet on this one. You’re missing a really critical point,’ then I think you need to pay heed and attention.
“Some people use a power response, saying, ‘Too bad. This is where we’re going. Get on the bus.’ Personally, I don’t believe that. If one of them is questioning something that I put on the table or something one of their peers put on the table, I have an inherent trust and belief that they are trying to make things better and they truly believe there is another path to go down.”
Casey realized the benefits of a more collaborative style of leadership in college.
“You’d have a study group, and five people would present a paper,” Casey says. “I may have been a little egocentric in those days because I basically said, ‘I can’t really trust my future and my grades in these people’s hands because I don’t know them.’”
As he moved into the business world, Casey learned that guiding a company by yourself does not work nearly as well as writing your own research paper.
“My responsibilities started to expand, and all of a sudden, I realized that you can’t do it all yourself. The definition of management is getting things done through other people. If you could do everything yourself, you wouldn’t need the four or five or 50 people you have on your staff. By developing that skill of delegation, I’m that much more effective.”
The team approach has served Casey well. But once a consensus is reached on how to move forward, he expects the group to march in lockstep to execute the plan.
“Once that team makes a decision, you owe it to the team to support that outcome,” he says. “One thing I do not tolerate is people walking away from a key decision in our organization and saying, ‘Well, that’s what they decided. I didn’t think it was a good idea.’
“If things are mandated from the top down and everybody is told what to do, I assume people might disagree with the outcome. If people have the ability and the right to participate in the development of the outcome, you have a responsibility once that decision is made to work very hard to execute it on behalf of your team.”
Success breeds success
Once everyone is on the same page with a new strategy, most companies get a boost from the simple fact that people like to be part of something successful.
“There are not a lot of folks that really want to go to work and just sit in a corner by themselves all day long,” Casey says. “Most people, regardless of personality, enjoy success, and they want to be part of a successful team.”
One of the greatest rewards of being an executive is watching people step up to a challenge.
“They always respond better than you imagined if they trust you and they trust your leadership,” Casey says. “Nothing breeds success like success. People get involved and start getting recognition for the work that they are putting in. Those are incredible motivators. People get in that frame of reference and say, ‘Wow, what’s the next big challenge?’”
Casey also believes that a successful CEO is only as good as the family he or she has standing by them. He and his wife of 32 years, Ginny, have three children.
“As the kids grow older, they really ask very insightful questions that really cause me to think about who I am,” Casey says. “Business can be very challenging and very trying. That is where that family piece centers you, no matter how crazy things get around here or how difficult the challenges are.”
In 2001, Tony Grijalva was facing a pivotal decision that could make or break the future of G&A Partners. He could keep trying to build a division that his company had put a lot of time and effort into, or dissolve the model and focus entirely on a plan that he believed could really drive revenue growth. Grijalva, the company’s chairman and CEO since its inception in 1995, decided to go with his instincts. He turned his eye toward becoming a professional employer organization, which provides clients with administrative, human resource and and risk management services. The move paid off. G&A took in an estimated $215 million in revenue in 2006 and has 110 corporate employees. Smart Business spoke with Grijalva about doing the right thing and why work ethic is more important than skills.
Find the right people. Any business is driven by people, and we always try to search, identify and keep good employees. But it takes awhile to refine your internal processes in order to accomplish that.
You always look for the experience, but more than that, we look for certain attributes like personality and work ethic. We feel that the actual job can be taught, but work ethic is a key. They don’t require supervision, they have initiative and they have the drive to do the right thing at all times.
It’s also extremely critical to go around, say hello to people and talk about their daily tasks. Give them the feeling that you care. It can be about work, but it can also be about their feelings and their personal lives.
Look for stability. It’s no longer the old model where someone will stay with the same company for 20 years. You expect people to move around, and you expect people to have a broader experience.
But by the same token, I don’t want to see people that move around every six months or every year. We like to see people with three, four or five years’ experience at various jobs. That tells me that whether it was good or bad, they had the perseverance and dedication to do what they were trained to do.
Follow your heart. I think people are born leaders. But I also think there can be a deliberate effort to do the right thing so that people want to follow.
One of the definitions of leadership is that people want to follow you. The key component is integrity. Integrity is doing the right thing, even when no one is watching. When you have that, people tend to follow your steps. They want to emulate you and they want to listen to you. Some people are born with that quality. Others have to work hard at it.
We live in a capitalistic society, so the traps are always there not to do the right thing. Tell yourself what the principled thing to do is. Keep telling yourself that your principles are important.
At the end of the day, if you are principled, you’re going to prevail. Your enemies are going to respect you for it, and your friends are going to like you even more.
Don’t be afraid to grow. For a small business that grows beyond small and starts moving to the middle market, you have to realize that you are in the middle market. You need to spend money and do certain things which are different from what they were when you started. Understand your own success and realize you are in a different league. You are a little bigger and you can do things a little differently. Have a good layer of middle management, which is difficult because middle management and good management require money. But you have to make the decision: Do I invest in people in order to grow even more, or do I stay where I am and become content with that? Business is very dynamic, and things change constantly, either because of technology or new ideas. You have to constantly be looking for ways to reinvent yourself or re-engineer your processes to do better things and to diversify. That’s a constant challenge if you want to grow and compete.
Look at your industry and see the trends and understand that you want to be on the leading edge. If you don’t, it will be good for the short term, but it won’t continue. You have to be constantly vigilant.
Keep employees engaged. Evaluation is the only way you can measure where employees are. It’s critical that we align the evaluation with the job description to make sure that things are going the way you intend them to go. We try to do that every six months. It keeps them focused on results.
Make sure you keep them engaged by sharing responsibilities, empowering them to make decisions and by delegating. Sometimes, it is trial and error. As the employee develops, you start small. As they earn your trust, you keep giving them more.
Focus on being the best, and success will follow. For me, success would be being one of the best employers in town. To know that you created something that people brought to the next level, and your employees and families are well taken care of. Everything else seems to follow that. Personal success and contentment seem to be a consequence of that.
As long as you give, the receiving end will always be there. Humility is important in order to know your limitations. Understand your weaknesses so that you can seek the right help, and partner with other people that are smarter than you so your joint resources can accomplish something.
Realize that everybody makes mistakes. You want to foster the notion that mistakes are OK and not be so severe or critical of the mistake, unless it happens frequently. You can learn from those mistakes and strive not to do it again. You can have an open-door policy where consequences do exist, but candor is never penalized.
Understand that every failure is an opportunity to learn. You try to analyze the reason why things fail and dissect the problem in order to understand it. If you don’t, chances are you’ll do the same thing again.
Take it in and move on to the next item and try to do it right.
HOW TO REACH: G&A Partners, www.gnapartners.com